The Debt Respite Scheme (Breathing Space) guidance is set to be rolled out on Tuesday 4th May 2021 and the purpose of this initiative is to support those who genuinely cannot pay or would benefit from some additional time to tackle their debts.
In a standard Breathing Space, most enforcement action is put on hold for up to 60 days, with a freeze placed on additional interest and charges. A mental health crisis variation is only available to someone who is receiving crisis treatment, and this lasts as long as that treatment requires, plus a further 30 days.
How and when will this be applied?
Debtors can only be granted Breathing Space after assessment from a qualified debt adviser. A debt adviser must also carry out a midway review which could see the Breathing Space cancelled if the debtor has failed to comply with their obligations. Relevant debts include those from before the legislation comes into force, but new debts incurred after a Breathing Space is already applied will not qualify.
Not every person who makes an application will be successful. If simple budgeting adjustments can be made or assets can easily be sold to clear debt, a request for Breathing Space is unlikely to be successful. Applications will also be rejected if a successful application has previously applied within the last 12 months, unless this relates to a mental health crisis.
Whilst enforcement firms cannot enforce a debt during a Breathing Space, a debtor is still legally required to pay their debts and liabilities. If there is a controlled goods agreement in place and a repayment plan has been agreed upon, the debtor should continue to make payments under that agreement, however if payments are not maintained, no action can be taken until the Breathing Space has ended
How are enforcement firms responding?
All enforcement firms have a responsibility to ensure they are communicating to the best of their ability with clients and debt advisors concerning Breathing Space. Bristow & Sutor is working closely with both Local Authority (LA) customers and Debt Advice professionals to ensure our approach remains clear and effective. If one of our customers is notified that a debt has moved to a Breathing Space agreement, they are instructed to let us know immediately via our real-time customer portal so that all activities related to that debt can automatically stop. This begins the day after the debtor’s details are put onto the Breathing Space register. LA personnel are also expected to identify any additional debts owed through their own records and feedback important information to debt advisors.
Beyond meeting the needs of legislation, Bristow & Sutor continues to add social value to the communities we engage with. This includes ongoing digital transformation and enhanced services, such as the introduction of webchat for debtors, a dedicated WhatsApp channel, text reminders for cases in payment arrangements, more payment methods and the prioritisation of successful contact techniques based on behavioural science and analysis.
You can find the latest government information on the Debt Respite Scheme at gov.co.uk
If you have any other questions or would like to know more about the Enforcement Agency Services framework available through YPO, please get in touch.